Fiscal Policy Office (FPO) director-general Pornchai Thiraveja believes the Thai economy will grow by a minimum of 3% this year despite soaring domestic energy and product prices caused by the Russia-Ukraine war.
The sharp spike in retail oil prices has increased production costs in Thailand, which means the FPO's previous growth forecast of 3.5-4.5% is unlikely to be attained, he said, but he remains confident it will not be lower than 3% this year.
The Bank of Thailand recently cut its 2022 GDP growth forecast from 3.4% to 3.2%.
Mr Pornchai said Moody's Investors Service affirmed Thailand's credit rating and maintained its outlook at stable.
Last week the rating agency affirmed the Thai government's Baa1 issuer and local currency senior unsecured ratings.
The affirmation reflects Moody's expectation that Thailand will continue to display economic resiliency to future shocks, underpinned by its large and diverse economy and strong macroeconomic policy effectiveness.
Moody's predicts the Thai economy will expand by 3.4% in 2022 and 4.8% in 2023.
- Bottoming out -
Mr Pornchai said the Thai economy has bottomed out. The economy in the fourth quarter of 2021 expanded 1.9% year-on-year, compared with a contraction of 12.3% year-on-year in the second quarter of 2020 when the economy was flattened by the outbreak of the Covid-19 pandemic.
In 2020 the economy shrank by 6.2%, mainly attributed to the impact of the pandemic.
In response to the pandemic, the government launched a swathe of relief measures to alleviate the impact. As a result, the economy expanded 1.6% in 2021.
He said the economic recovery will likely happen on an uneven basis.
The export sector recorded a strong rebound with shipment value growth of 17.1% year-on-year in 2021. Among the sectors that have yet to recover are tourism and related sectors.
Thailand welcomed around 40 million foreign visitors in 2019, accounting for 12% of the country's GDP, before plummeting to 6.7 million arrivals in 2020 and around 400,000 in 2021 amid the pandemic.
Mr Pornchai expects the tourism outlook will gradually improve because of the improving Covid-19 situation and more countries have reopened their borders.
- Strong fiscal status -
He said Thailand has fiscal stability. The country has a treasury balance of more than 418 billion baht as of February 2022, reflecting sufficient fiscal space to engage in necessary spending to support investment and mitigate any impact.
The country's public debt-to-GDP ratio stood at 60.2% as of February 2022. It is expected to reach 62.7% at the end of fiscal 2022, still below the ceiling of 70% of GDP.
The government has also injected money into the economic system to revive growth, including an annual budget for fiscal 2022 of 3.1 trillion baht, of which 600 billion is allocated for investment.
During the first five months of the fiscal year, 42.5% of the annual budget was disbursed.
The government has a remaining budget of 74 billion baht under the second emergency loan decree, which allows it to borrow 500 billion baht to mitigate the impact of the pandemic.
Mr Pornchai said the government has to run a budget deficit in the short and medium term to support the economic recovery and allow the possible launch of additional measures to handle the impact of the pandemic in the future.
The government set a target of a balanced budget for the long term when the economy returns to normalcy.
In the medium term, the government aims to keep the ratio of the deficit to GDP at an appropriate level, he said.
The deficit in fiscal 2023 is estimated at 695 billion baht or 3.9% of GDP, down from 700 billion in fiscal 2022 or 4.1% of GDP.
In fiscal 2023 the government expects revenue of 2.49 trillion baht, 90 billion higher than in fiscal 2022, said Mr Pornchai.
Expenditure in fiscal 2023 is set at 3.18 trillion baht, 85 billion higher than in fiscal 2022.
The ratio of the deficit to GDP is expected to decline gradually from 3.9% in fiscal 2023 to 3.8% in 2024, 3.7% in 2025 and 3.6% in 2026, he said.